Abbott and Palmer stalemate on carbon and mining taxes

Daniel BurdonDaniel Burdon is APN Australian Regional Media's Canberra bureau reporter, covering federal parliament and politics. He was previously a rural and general news reporter at the Morning Bulletin in Rockhampton and worked in Alice Springs for the Centralian Advocate.

A STALEMATE is emerging between the Abbott government and Sunshine Coast MP Clive Palmer over the government's key promises to repeal the carbon and mining taxes.

The Palmer United Party leader will soon control four votes - and the likely balance of power - in the Senate.

On Tuesday the controversial political and business figure ignited a game of political brinkmanship over the government's direct action policy, vowing to block key incentives linked to the initiative.

Mr Palmer told The Guardian Australia on Monday the direct action plan was "finished", as the PUP Senators believed the $1.5 billion incentive fund would be better spent on raising pensions.

But the funds attached to the Abbott government's much-criticised climate change policy may yet be attached to budget appropriation bills, Environment Minister Greg Hunt said on Tuesday.

Mr Hunt said he would attach the emissions reductions fund legislation to the appropriation bills; which the Senate cannot change, only approve or reject.

But Mr Palmer hit back on Tuesday, indicating he was prepared to use his coming Senate power to vote down the repeal of both the carbon and mining taxes, "if the government plans to play it smart".

Such a move would escalate the existing Senate block to the government's agenda, which has already seen carbon and mining tax repeal bills rejected once by the Senate.

Should the same repeals be again rejected by the Senate, through opposition from the PUP voting bloc, Labor and The Greens, it could trigger a double dissolution and another election.

Mr Palmer's escalation of the situation follows a fresh endorsement of the PUP's policies, effectively wedging both the Labor and Coalition vote during the final West Australian Senate election three weeks ago.

He told the ABC on Tuesday his party remained prepared to vote down the direct action policy "whatever form it's in", including the possibility of blocking government's supply of financial appropriations.

The last time a double dissolution was triggered by the Upper House blocking supply of the government's financial bills was in 1975, a key event that led to the dismissal of then-prime minister Gough Whitlam.